Colombian industrial conglomerate Grupo Argos has reportedly approached Denver-based Summit Materials about a merger, according to Reuters’ sources. The company would combine its subsidiary Cementos Argos, which currently operates six U.S cement plants and 15 terminals, with Summit in a deal to further bolster its U.S. footprint.
Summit Materials is an active acquirer in the construction materials industry having completed 70 deals since its founding in 2009. However, Summit’s CEO Tom Hill stated during the company’s first-quarter conference call last month that “with respect to acquisitions, our pipeline has slowed a bit.” According to The Motley Fool, the company’s lack of acquisition prospects and its firepower to make deals makes “Summit an attractive acquisition candidate for the deeper-pocketed Grupo Argos.”
Upon news of the potential merger, Summit’s shares rose 14% to $15.61 giving it a market capitalization of $1.8 billion. The company’s debt stood at $1.9 billion as of the end of March. Reuters noted that Summit’s shares have underperformed this year against peers Martin Marietta Materials and Vulcan Materials as the cement sector becomes increasingly competitive.